FPL in fight over tax cut
January 9, 2019
HOMESTEAD — Florida Power & Light customers are petitioning the Florida Public Service Commission for a rate reduction after the electric utility received a $736.8 million windfall from the Tax Cuts and Jobs Act of 2017.
The PSC is a five-member panel that aims to ensure safe, efficient and reliable utilities are offered at a fair price.
The petition filed last month has been muddied by a number of factors, including FPL’s Hurricane Irma recovery costs and a 2016 rate settlement.
FPL responded that the filing is a tremendous disappointment and that two of the three petitioners were parties to a settlement agreement in 2016 that established rate stability for a minimum term of four years. That agreement states that FPL’s rates are to remain unchanged at least through December 2020, or the minimum term, according to FPL officials.
The Office of Public Counsel and the Florida Retail Federation reached that agreement with FPL, while the Florida Industrial Power Users Group, as part of the customers named in the $736.8 million petition, did not.
The agreement deemed that if FPL’s earnings fall above or below its authorized range of expenses then any party to the settlement agreement would have the right to seek relief. The Amortization Reserve Mechanism is central to that agreement, FPL says.
“The ARM is what allows FPL to absorb additional expenses or lower than expected sales while remaining within the authorized range. Likewise, the ARM allows FPL to absorb lower expenses or higher than expected sales while remaining within its authorized range. … The use of this mechanism, consistent with the way it has been used in prior settlements, is flexible,” the company’s court response states.
FPL also reported facing $1.3 billion in Hurricane Irma recovery costs, and that the tax savings were used to replenish the company’s storm reserve account.
OPC and FRF responded that the utility’s response is improper, misrepresents the facts and circumstances related to the settlement agreement, and should be ignored by the commission. Furthermore, they claim that FPL is attempting to retain the tax savings to benefit shareholders rather than customers.
The Florida Industrial Power Users Group, a co-petitioner with OPC and the FRF, filed a motion Dec. 27 for an extension to respond to FPL’s response, and is not a party to the response of OPC and the FRF.